MACEDONIA

Former Yugoslav Republic of Macedonia

Republika Makedonija

COUNTRY OVERVIEW

LOCATION AND SIZE.

Located in southeastern Europe, the Former Yugoslav Republic of
Macedonia (generally referred to as Macedonia) is a completely
landlocked country, covering an area of 25,333 square kilometers (9,781
square miles). It is bounded on the north by Serbia and Montenegro
(collectively the Federal Republic of Yugoslavia)—mostly by the
province of Kosovo—on the east by Bulgaria, on the south by
Greece, and on the west by Albania. Comparatively, the country is
slightly larger than the state of Vermont. The capital, Skopje, is
situated in the north-central part of the country; other cities of
importance include Bitola, Kumanovo, and Tetovo.

POPULATION.

According to the 1994 census, the population was 1,945,932, or 88,000
fewer than the previous census recorded in 1991. This decline resulted
from the
emigration
of ethnic Serbs after the breakup of Yugoslavia, and by a boycott of
the census by ethnic Albanians. By July 2000, the population had risen
to 2,041,467. Its birth rate is 13.73 per 1,000 population, and the
death rate is 7.69 per 1,000 population, resulting in one of the highest
rates of population growth in Europe. The population is expected to
reach 2.2 million by 2010. The population density is nearly 79 persons
per square kilometer (205 per square mile).

Macedonian Slavs constitute two-thirds of the population, with ethnic
Albanians the second largest group, accounting for 22.7 percent. Turks
make up 4 percent, Roma (Gypsies) 2.2 percent, and Serbs 2.1 percent.
Several other small groups round out the total. Albanians dispute census
results, claiming to represent one-third of the population. While
Macedonia received many Kosovar Albanian refugees during the Kosovo war
of 1999, most of them have since returned to their country. The
population is young, with 23.8 percent below the age of 14 and 10
percent older than 65. Over 60 percent of the population live in urban
areas, 23 percent of them in the capital city Skopje, and 5 percent in
its suburbs.

SERVICES

The growing services sector of the Macedonian economy accounted for 55
percent of the country's GDP in 1998 and was expected to continue
to grow in importance in the coming decades.

FINANCE.

As in the rest of the former Yugoslavia, most banks in Macedonia were
not controlled directly by the government during the communist era but
by the state enterprises, their largest customers. Large firms could
force banks to lend them money even when they were not credit-worthy, an
ineffective and risky system. The banking sector was badly hurt in the
early 1990s when many firms defaulted on their loans. To make things
worse, in the wake of the Yugoslav crisis, the cash-stripped National
Bank of Yugoslavia in Belgrade refused to return the Macedonian foreign
exchange deposits
it was holding, thereby depriving the republic of
hard currency
. Because of the high
inflation
of the denar, most people in Macedonia used to save in foreign currency
and this move severely undermined confidence in the banking system.
Although the Macedonian government assumed the debts, all
foreign-currency deposits had to be frozen and were paid out only over
time. Confidence in banks was further shaken in 1997 with the collapse
of TAT, a pyramid savings firm. The authorities have since tightened
regulation of the sector and have initiated projects to rebuild
confidence.

TOURISM.

Tourism was an important factor when the republic was part of
Yugoslavia. There are several major tourist destinations—resorts
and beautiful historical towns situated mainly along the Ohrid lake and
in the mountains. The wars reduced tourist trade in the early 1990s, but
the industry subsequently began a recovery, with income from tourism
totaling $27 million in 1997. NATO troops and international staff
stationed in Macedonia and Kosovo often spend their leave in Macedonia,
and the number of foreign visitors to the country averaged 18,485 per
month in the first half of 2000, compared with 12,060 during the same
period in 1999.

RETAIL.

Retail in Macedonia is predominantly private and comparatively well
developed, although foreign investment is still limited. Informal retail
is sizeable, and small stores prevail. Figures in 2000 showed a massive
yearly increase in real terms of 57.1 percent in retail revenue. This is
partly explained by the Kosovo effect (the presence of NATO and
international staff), and partly by a rise in consumer spending, driven
by government's payments to
pensioners
, the unfreezing of foreign-currency accounts, and payments to TAT
depositors.